Ratings Agency Downgrades Australia's Big Banks

Editorial Staff

8 April 2020

One of the “Big Three” rating agencies has cut ratings on Australia’s four largest banks and subsidiaries in New Zealand because of the expected blow from steps to handle the COVID-19 pandemic. The downgrades by . Their New Zealand-based businesses were also affected.

Fitch said it predicts that Australia and New Zealand's gross domestic product will shrink in the first half of this year and recover modestly in the second half of this year, extending into 2021. These conditions will hit earnings and the banks’ asset quality.

Some firms will not restart and people will struggle to resume paying off loans, Fitch said.

Banks’ efforts in recent years to bolster their capital buffers will provide some support, the agency said.